Montana Code 33-28-104. Minimum capital surplus — letter of credit
33-28-104. Minimum capital surplus — letter of credit. (1) A captive insurance company may not be issued a certificate of authority unless it possesses and maintains unimpaired paid-in capital and surplus of:
Terms Used In Montana Code 33-28-104
- Association: means any legal association of sole proprietorships or business entities that has been in continuous existence for at least 1 year unless the 1-year requirement is waived by the commissioner and the members of which collectively, or the association itself:
(a)owns, controls, or holds with power to vote all of the outstanding voting securities of an association captive insurance company incorporated as a stock insurer;
(b)has complete voting control over an association captive insurance company incorporated as a mutual insurer;
(c)constitutes all of the subscribers of an association captive insurance company formed as a reciprocal insurer; or
(d)owns, controls, or holds with power to vote all of the outstanding ownership interests of an association captive insurance company organized as a limited liability company. See Montana Code 33-28-101
- Branch captive insurance company: means any foreign captive insurance company authorized by the commissioner to transact the business of insurance in this state through a business unit with a principal place of business in this state. See Montana Code 33-28-101
- Captive insurance company: means any pure captive insurance company, association captive insurance company, protected cell captive insurance company, special purpose captive insurance company, or industrial insured captive insurance company formed or authorized under the provisions of this chapter. See Montana Code 33-28-101
- Captive reinsurance company: means a captive insurance company authorized in this state that reinsures the risk ceded by any other insurer. See Montana Code 33-28-101
- Captive risk retention group: means a captive insurance risk retention group formed under the laws of this chapter and pursuant to Title 33, chapter 11. See Montana Code 33-28-101
- Cash equivalent: means any short-term, highly liquid investment that is:
(a)readily convertible to known amounts of cash; and
(b)so near to its maturity that it presents insignificant risk of changes in value because of changes in interest rates. See Montana Code 33-28-101
- Federal Reserve System: The central bank of the United States. The Fed, as it is commonly called, regulates the U.S. monetary and financial system. The Federal Reserve System is composed of a central governmental agency in Washington, D.C. (the Board of Governors) and twelve regional Federal Reserve Banks in major cities throughout the United States. Source: OCC
- Foreign captive insurance company: means any captive insurance company formed under the laws of any jurisdiction other than this state. See Montana Code 33-28-101
- Industrial insured: means an insured:
(a)who procures the insurance of any risk or risks by use of the services of a full-time employee acting as an insurance manager or buyer;
(b)whose aggregate annual premiums for insurance on all risks total at least $25,000; and
(c)who has at least 25 full-time employees. See Montana Code 33-28-101
- Member: means a sole proprietorship or business entity that belongs to an association. See Montana Code 33-28-101
- Protected cell: means a separate account established by a protected cell captive insurance company formed or authorized under the provisions of this chapter, in which an identified pool of assets and liabilities are segregated and insulated, as provided in this chapter, from the remainder of the protected cell captive insurance company's assets and liabilities in accordance with the terms of one or more participant contracts to fund the liability of the protected cell captive insurance company with respect to the participants as set forth in the participant contracts. See Montana Code 33-28-101
- Protected cell captive insurance company: means any captive insurance company:
(a)in which the minimum capital and surplus required by applicable law are provided by one or more sponsors;
(b)that is formed or authorized under the provisions of this chapter;
(c)that insures the risks of separate participants through participant contracts;
(d)that funds its liability to each participant through one or more protected cells and segregates the assets of each protected cell from the assets of other protected cells and from the assets of the protected cell captive insurance company's general account; and
(e)that is incorporated or formed as a limited liability company. See Montana Code 33-28-101
- Pure captive insurance company: means any company that insures risks of its parent and affiliated companies and controlled unaffiliated business entities. See Montana Code 33-28-101
- Special purpose captive insurance company: means a captive insurance company that is formed or authorized under this chapter that does not meet the definition of any other type of captive insurance company defined in this section or is formed by, on behalf of, or for the benefit of a political subdivision of this state. See Montana Code 33-28-101
- State: when applied to the different parts of the United States, includes the District of Columbia and the territories. See Montana Code 1-1-201
(a)in the case of a pure captive insurance company, not less than $250,000;
(b)in the case of an industrial insured captive insurance company, including a captive risk retention group, not less than $500,000;
(c)in the case of an association captive insurance company, not less than $500,000;
(d)in the case of a special purpose captive insurance company, an amount determined by the commissioner after giving due consideration to the company’s business plan, feasibility study, and pro forma documents, including the nature of the risks to be insured;
(e)in the case of a protected cell captive insurance company, not less than $500,000. However, if the protected cell captive insurance company does not assume any risks, the risks insured by the protected cells are homogenous, and if there are not more than 10 cells, the commissioner may reduce the amount required in this subsection (1)(e) to an amount not less than $250,000.
(f)in the case of a branch captive insurance company, not less than the applicable amount of capital and surplus required in subsections (1)(a) through (1)(e), as determined based upon the organizational form of the foreign captive insurance company. The minimum capital and surplus must be jointly held by the commissioner and the branch captive insurance company in a bank of the federal reserve system approved by the commissioner.
(g)in the case of a captive reinsurance company, not less than 50% of the capital that would be required for that type of captive insurance company.
(2)The commissioner may require additional capital and surplus based upon the type, volume, and nature of insurance business transacted.
(3)Capital and surplus may be in the form of cash, cash equivalent, or an irrevocable letter of credit on a form prescribed by the commissioner and issued by a bank chartered by the state of Montana, a member bank of the federal reserve system, or a bank chartered by another state if that state-chartered bank is approved by the commissioner.